Bank of Korea Warns Won-Pegged Stablecoins May Boost Dollar Demand

South Korea's central bank governor Rhee Chang-yong has raised concerns that local stablecoin initiatives could inadvertently strengthen demand for U.S. dollar-pegged tokens. While acknowledging the necessity of won-denominated stablecoins, Rhee cautioned that such instruments might create arbitrage opportunities rather than reduce dollar dependency.

The warning comes amid political momentum for won-pegged stablecoins, with President Lee Jae Myung's administration pushing regulatory reforms to enable their issuance. The Democratic Party recently proposed amendments to the Digital Asset Basic Act that WOULD authorize domestic firms to issue KRW-backed stablecoins—a move seen as preventative against capital flight.

Market observers note the appointment of former crypto executive Kim Yong-beom as chief policy officer signals serious intent. Rhee maintains the central bank isn't opposed to sovereign stablecoins but emphasizes the need for careful foreign exchange management.